Brexit announcement sets new course for May and the Tories

October 10, 2016

4 Min Read

By Gavin Collins

On October 2nd at the Conservative Party conference in Birmingham, the Prime Minister, Theresa May, presented her vision of a ‘hard Brexit’. It was announced that Article 50 of the Lisbon Treaty will be invoked by the Government no later than the 30th March 2017, after which the UK will have exactly two years to negotiate the terms of its separation from the European Union. In addition to this revelation, Mrs. May stated that the so-called Great Repeal Bill (GRB) will be introduced in the next Queen’s speech. This bill, if passed, will have the effect of repealing the 1972 European Communities Act, which grants EU law supremacy over domestic legislation, and will automatically transfer all EU law into UK law.

Mrs. May’s speech was rightly championed for putting an end to speculation about whether the Government was going to see the Brexit vote through to its rightful conclusion. European Council President Donald Tusk stated that the speech brought ‘’welcome clarity’’ while German Chancellor Angela Merkel expressed similar sentiment, albeit while reaffirming that negotiation prior to the invocation of Article 50 would not be possible.

In the UK, some commenters were critical of Mrs. May’s decision to set the date of invocation without first receiving assurance from the EU that the UK would be able to negotiate on immigration while still being allowed to remain inside the single market. Mrs. May appears to have rejected this notion in favour of negotiating with an open hand and with clear objectives.

There is also considerable uncertainty regarding the fate of the over four decades’ worth of EU law which will maintain its status as UK law following the passage of the GRB. If, as has been rumoured, it is to be left up to the executive branch to sort through this legislation, there may very well be a constitutional dispute in the near future – something which would likely test her 12-seat majority government.

Despite the relative benefits of an organised withdrawal, the economic forecast does not appear positive; after Mrs. May’s speech, sterling promptly descended to its lowest point since 1985 – even surpassing its nadir following the aftermath of the referendum vote. While the FTSE saw a corresponding increase in value as the weaker pound made UK equities more attractive to foreign investors, this will not remain the case if failed negotiations result in a marked decrease in investment in the UK.

The certitude of many Brexiters that the EU will cave to all of the UK’s demands because of economic and political fears, is already beginning to look like a losing bet. This has been made all the more apparent now that Mrs. May has chosen to disregard the argument to invoke Article 50 closer to the date of the French and German elections, in order to gain leverage over the two embattled heads of state. Now that the date of Article 50’s invocation has been made public, EU negotiators who are most opposed to the concept of the UK receiving a favourable deal have an important piece of knowledge that they can now utilise to frustrate the UK’s efforts to come away from the negotiating table with a favourable result.

Mrs. May should be praised for presenting the British public with the realities of Brexit. In order to win, the Leave campaign had to avoid answering the question of whether there would be any deleterious short-term effects on the UK economy if the UK left the EU. The real strengths of the Brexit position are the long-term benefits that will be derived from leaving an overly bureaucratic union of extraordinarily unequal member states, and from being able to more efficiently negotiate as a sovereign entity. This does not mean, however, that most trade deals will be completed by the end of the two-year window following the invocation of Article 50, nor that the UK economy will be impervious to setbacks during this period. Indeed, Mrs. May’s speech has signalled a point of departure into uncharted, likely rough waters ahead for her government and the country.